It's been ingrained into many people's heads that you have to keep anything and everything related to the past year of your financial life even after you do your taxes. I'm here to tell you that this isn't the case. While you do need to keep some things in case of an audit, you can safely clear out that backlog in the filing cabinet.
Once you're done with your return this year, you can toss out all those personal bills, ATM receipts, bank statements and deposit slips you're keeping just in case you need to show them to the IRS sometime down the road.
Just be sure to retain the following:
• Tax returns
• W-2s, 1099s and other IRS forms
• Year-end statements, especially those regarding your investments and your mortgage
• Receipts for charitable contributions and other items you claimed as deductions
• IRA and interest income statements
Usually the audit window is three years, or six years if you're self employed. It can differ based on your personal situation though, so you may want to ask your tax advisor for specifics.
Once you're ready to make some room in the cabinet, don't forget to use that cross cut shredder. And don't forget to keep papers you need for non-tax reasons, such as receipts for products with warranties that are still valid.